In the prevailing climate of cost containment, doctors are increasingly expected to consider the economic consequences of treatment choices.

Clinical (or medical) economics attempts to apply economic principles to the description and analysis of the costs of medical interventions, so as to identify how best to spend scarce health care resources.

Such economic evaluations may assess the overall financial burden of a disease to society as a whole (macro-economics), or attempt to compare alternative treatment strategies for a specific clinical situation (micro-economics).

In addition to expenditure on drugs and investigations (direct medical costs), economic studies may consider a variety of other costs.

These include direct costs borne by patients (e.g. prescription charges, travel, food), indirect costs to society owing to lost productivity (resulting from morbidity or premature mortality) and even intangible costs which assign a monetary value to outcomes of disease such as pain, distress and anxiety.

Four main types of economic analysis are in current use.

Cost-minimization analysis attempts to identify the least expensive option in situations where there are a range of equally effective treatments for a given clinical condition, whereas cost-effectiveness analysis allows management strategies differing both in cost and efficacy to be compared.

The cost-effectiveness of health care programmes targeting different disease states may also be compared using c...